Creative use of reinsurance not avoid rescission of life insurance policy

The Eleventh Circuit has affirmed a District Court Order granting Met Life summary judgment, rescinding a life insurance policy based upon misrepresentations in the policy application. The decision was based upon a Florida statute, which provides for rescission in either of two circumstances: (1) the insurer can show that the prospective insured made misrepresentations in the application that were material either to the acceptance of the risk or to the hazard assumed by the insurer; or (2) the insurer would not have issued the policy (or would have issued it on different terms) had it known the true facts. The insured contended that any misrepresentations could not, as a matter of law, have been material to the acceptance of the risk because Met Life had completely reinsured the liability. The Court found that it did not have to reach this contention since the evidence supported rescission under the second prong of the statutory test. Miguel v. Metropolitan Life Insur. Co., Case No. 06-11491 (11th Cir. Oct. 18, 2006). This creative argument deserves an “A” for effort.